At least one leading oil tanker operator is likely to follow collapsed smaller operators into insolvency, senior figures in the industry believe, as the sector is swamped by oversupply, the FT reports. The executives were speaking amid a slump that has sent the rates paid to charter ships way below vessel operating expenses. The average short-term spot market rate to charter a very large crude carrier – the largest widely-used class – from the Gulf to Far East on Friday stood at just $1,795 per day, compared with the $29,800 that Frontline, the biggest listed tanker operator by fleet capacity, recently said such vessels needed to break even. Nasdaq-listed Omega Navigation, Netherlands-based Marco Polo Seatrade and several other small operators have already been forced into bankruptcy protection. Cyprus-based Ocean Tankers, which made a €19.6m net loss for the first half on €9.77m income, has had several of its ships arrested – held under court orders by creditors – during port calls this year. Now executives predict that far larger names are likely to follow. Moody’s last week downgraded one operator facing acute challenges – New York-listed General Maritime – to Caa3, only just above default.

Kate is FT AV’s Asia Correspondent. She joined FT Alphaville in mid-2011 after carrying out various roles in the FT’s London office since 2005: interactive editor, companies reporter, and founding editor of the FT’s Energy Source blog.

Senior figures in the shipping industry believe at least one leading oil tanker operator is likely to follow collapsed smaller operators into insolvency, the FT reports, as the sector is swamped by oversupply. Chief executives from Frontline, Overseas Shipholding Group, and Teekay Tankers all pointed to the risk of collapse moving to larger operators after several smaller peers, such as Omega Navigation and Marco Polo Seatrade, were forced into bankruptcy protection. The rates paid to charter ships have fallen below vessel operating expenses. The average short-term spot market rate to charter a very large crude carrier – the largest widely-used class – from the Gulf to Far East on Friday stood at just $1,795 per day, compared with the $29,800 that Frontline, the biggest listed tanker operator by fleet capacity, recently said such vessels needed to break even.

Tracy Alloway used to be deputy editor of FT Alphaville. Here she learned the details of derivatives, the absurdities of accounting and the various structures of ... erm ... structured finance. She now covers big US banks for the FT paper, including Goldman Sachs and Morgan Stanley. She pops up on FT Alphaville every once in a while.

Boeing has clinched a fiercely contested contract to supply the US Air Force with refuelling aircraft, beating rival EADS, the European aerospace and defence company, to win the $35bn prize, the FT reports. The victory caps a decade of false starts, political controversy and international intrigue over which of the two dominant global aerospace companies would eventually build a new fleet of “flying petrol stations” for the US military. Bloomberg adds that the Boeing win was a surprise for the aerospace industry.

Goldman Sachs was among those who noted that crude was increasingly being moved out of tankers on account of the changing structure of the oil future curve — which had gone from a steep contango a year ago to a near flattening just one month ago. Read more

Tanker trouble was still brewing on Friday, as Frontline –the world’s biggest independent oil tanker shipping company– reported an 84 per cent fall in Q3 income with a loss of $6m.

Chief Executive Jens Martin Jensen, quoted by Reuters, said the quarter had been among the worst ever. However, he also stated that the industry was at last seeing a light at the end of the tunnel. Read more

Most people will have heard about the dramatic collapse in dry bulk shipping rates that occurred in October/November following the paralysis that hit global trade in the weeks after the Lehman Brothers collapse. However, tanker rates didn’t respond quite as dramatically at the time.

Now, a good six months on, there is no denying tanker rates have finally responded with the same calamitous descent downwards. The fall may have been more haphazard than that of Baltic Dry — most likely due to the contango in the oil market which saw demand come in for vessels as storage — but the decline is no less serious, and is consequently creating some unusual dynamics in the energy market. Read more